An artist's impression of Rocket Lab's Photon approaching Venus - which will happen in October next year, all going to plan. Image / Supplied
An artist's impression of Rocket Lab's Photon approaching Venus - which will happen in October next year, all going to plan. Image / Supplied
Rocket Lab shares fell 8.93 per cent today to US$6.02 (for a US$2.82 billion market cap) after US investment bank Morgan Stanley reduced its 12-month target price to US$12 from the previous US$16.
The Kiwi-American firm reverse-listed on the Nasdaq in August at US$10 and shot as high as US$21.34before being caught in the Tech Wreck 2 downdraft and hitting a low of US$3.85 in June.
Despite trimming its 12-month target, Morgan Stanley remained bullish enough about Rocket Lab's long-term prospects to maintain its "overweight" (or "buy") rating on the stock.
A team of Morgan Stanley analysts said Rocket Lab's share price drop this year had put the stock at an attractive entry point for an early space mover with "real revenue, an increasingly visible growth profile and initiatives under way that could upend traditional launch economics".
Rocket Lab was a standout among small launch peers given the launch heritage, performance track record and novel approaches to rocket reusability, the Morgan Stanley analyst said.
Still he stands tall: Rocket Lab CEO Peter Beck says his company is heading to Venus. Photo / Dean Purcell
"We are also encouraged by continued company efforts to reduce launch turnaround times, which help reinforce the value proposition of dedicated small launch vis-a-vis more economical rideshare options."
Morgan Stanley says its "bull case" for Rocket Lab would set its shares at US$32 (down from its former US$40 estimate) if it could achieve 35 Electron launches a year by 2026, and development of its much larger Neutron Rocket - scheduled for first launch in 2024 - was on time and on budget.
Its "bear case" - where Neutron is delayed and over-budget and Electron launches 26 times per year by 2026 - would lower the stock to US$3.
For now, the investment bank is leaning bull. Rocket Lab is "pulling ahead of the small launch pack", Morgan Stanley's analysts say.
Deutsche Bank upgrade
And there was some good news for Rocket Lab on Monday as Deutsche Bank maintained its buy rating and increased its 12-month target from US$14 to US$15.
Deutsche analyst Edison Yu said Rocket Lab was the "highest quality space asset to enter the public market so far". The company has established itself as a reliable small rocket launcher and has garnered "strong momentum" in satellite buses and related components.
Rocket Lab reported a net loss of US$37.4 million for the three months to June 30, more than double the US$16.7m it lost for the same period last year.
But the Kiwi-American firm also reported revenue that surged to US$55.5m, or five times the amount of its Covid-hit second quarter in 2021, and a third above its first quarter of this year.
It forecast third-quarter revenue would grow to between US$60m and US$63m, and said its adjusted earnings loss would be between US$8m and US$12m (from US$8.5m in the second quarter).
Rocket Lab finished the quarter with US$543m cash from the year-ago US$691m.
Heading for Venus
Rocket Lab also announced more details overnight on its mission to Venus - a passion project for founder and CEO Peter Beck that will be self-funded by the company, which is yet to put a price tag on the project.
All going to plan, a Rocket Lab Electron will launch next May, with its upper stage - which does double-duty as a "Photon" spacecraft, or satellite bus - then heading to Venus, where it is scheduled to arrive in October.
The Photon will deploy a tiny probe, with 1kg of instruments, that will fly through the clouds of Venus for about five minutes, at an altitude of 48km to 60km above the planet's surface.
Beck has joined several noted planetary scientists, including Massachusetts Institute of Technology professor Sara Seager, to design the mission.
The Rocket Lab founder announced the Venus mission in August 2020 after an international team of astronomers announced they had detected traces of phosphine, a simple molecule associated with living organisms.
Although the phosphine finding was the immediate trigger for next year's mission, Beck revealed it had been an ambition since childhood. "I'm madly in love with Venus," he said on YouTube Q&A.
Research suggests Venus was once a habitable planet similar to Earth. A 2019 study from Nasa's Goddard Institute for Space Studies found that Venus could have had shallow oceans on the surface for two to three billion years and this would have supported temperatures of between 20 and 44C.
Around 700 million years ago though, a resurfacing event released carbon dioxide into the atmosphere, turning Venus into a dangerous, inhospitable planet where atmospheric temperatures reach 538C.
Although more than 30 Venus missions have been undertaken, Rocket Lab's will be the first private exploration of the planet.
It follows Rocket Lab's Capstone launch for Nasa last month, when the firm put a satellite on a trajectory for the moon, making its first mission beyond Earth's orbit.
